Full Form of GRN

Updated on April 16, 2024
Article byWallstreetmojo Team
Edited byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

Full Form of GRN – Goods Received Note

The full form of GRN is Goods Received Note. The GRN refers to the business document that the customer fills at the time of receipt of the goods from the seller to confirm the receipt of all the goods as agreed between the parties involved, and it is often compared with the purchase order (PO) before issuing the payment to the seller of the goods.

Key Takeaways

  • GRN stands for Goods Received Note. Customers use the GRN to confirm they received all items as agreed upon with the seller. It’s compared to the PO before payment is made to ensure accuracy.
  • A goods receipt note is important because it serves as proof for the store manager to verify whether the received goods match the required quantity and amount specified in the notice. This document also becomes an audit trail for future reference.
  • This legal document helps financial departments of large companies compare orders with goods received and can be used as evidence in court.

Features of GRN

In manufacturing and other kinds of organizations, where the organizational process includes transporting the goods from one place to another or transporting from the outside market to the warehouse, the goods receipt note plays a very important role. Sometimes, the processing time may be slower than usual, which can be traced from the goods receipt note.

One of the important features of a goods receipt note is that, where the goods are transported to the store, the store manager takes this document as proof as to whether the goods are as per the required quantity, whether the required quantity as written in the note is received or not. Hence the goods receipt note also becomes proof and becomes the audit trail.

Full Form of GRN

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What is to be Included in Goods Received Note?

Usually, the pre-print of the goods receipt note is of the store’s department in the organization. Hence the management should properly train them in terms of what is required to be included in the goods receipt note. The following list is prepared on the important things to be included in GRN:

What is in GRN

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  • The top of the GRN shows the supplier’s name of the goods.
  • It is followed by the date and time of the issue and the date and time of receipt of the store’s department’s goods.
  • The proper address of the place where the goods are supposed to be transported and where the goods are supposed to be delivered, along with the proper PIN code.
  • The description of the goods getting transported and the quantity of each kind of product, the rate, and the price of the goods.
  • The end of the GRN is done by the signature and name of the authorized personnel of both the supplier, the store manager, and the clerk who is supposed to receive the goods.

Process of GRN

The following is the process of GRN:

  • Receiving the invoice and challan and unloading of the goods to the stores.
  • The physical verification of the number of goods received and the description of the goods.
  • If the goods are disputed or are of a short quantity, the supplier is contacted asking for the shortfall.
  • After the quantity is checked, the quality test is made.
  • An acknowledgement shall be made by challan and sent to the supplier.
  • After the above step, the receiving department will prepare the GRN in 5 copies. Original for them, and the remaining to the purchasing dept., accounts dept., one to the store manager, and one to the person making the purchase requisition.
  • Based on it, entries are made to store ledgers.

Importance

  • For any accounts department, the goods receipt note is a vital document since it serves the purpose of the objectivity principle of accounting. Any entry in the books of accounts is compulsorily required to be supported by proof in documentary form.
  • Further, before making any payment of products to the seller, the goods are verified with the GRN. Also, in an organization, to reduce the probability of errors and fraud, another must check one person’s work, and one person is not involved in more than one continuous process. Hence due to GRN, the organizational work is inspected by different people.
  • Since the actual quantity of goods is checked with the receipt note, payment is only made for those received. Hence wrongful payment is avoided.
  • This document also places an important role in the supplier. The supplier can prove with the help of the GRN that the goods have been dispatched from their end, as the GRN is an official legal document and can be accepted as proof in a court of law.

Goods Received Note vs Goods Dispatch Note

The following are the differences between Goods Received Note and Goods Dispatch Note:

  • The supplier’s dispatch department raises the Goods dispatch (GDN) while the purchaser’s receiver department prepares the Goods Received Note.
  • Without a GDN raised, the supplier’s accounts department cannot raise the invoice, while, without GRN, the purchaser’s department cannot make payment or entries in the books.

Benefits

The following are the benefits of the Goods Received Note:

  • It works as evidence for auditors and is included in the audit trail procedures.
  • GRN shows the quantity received; hence, the loss of higher payment to the suppliers can be detected.
  • It is delivery proof. It is a legally enforceable document and can be submitted to the court.
  • The logistics team personnel become accountable in case of errors or fraud since the quantity should always match with the GRN quantity. A sense of responsibility and alertness is created among the team.
  • The financial departments of bigger firms can use this document for comparison purposes regarding how many goods are ordered and how much has been received and entered into the books.

Conclusion

GRN is the abbreviation used for goods received in the note. As the name implies, the goods receive a note of the confirmation of the receipt of the goods by the customer or the buyer from the seller, which is filled by the buyer when the goods are received. It is an official legal document and can be accepted as proof in a court of law.

Frequently Asked Questions (FAQs)

How is GRN done in SAP?

To create a GRN, you must have an issued purchase order. Once you have made a GRN for an item, any pending item quantity from an approved indent request will be automatically updated. To access the GRN page, click the module access icon on the top of your dashboard, then navigate to Administration > Inventory > GRN.

Which Tcode is used for GRN in SAP?

The MIGO or MB1C transaction can create a goods receipt. However, most people prefer using MIGO due to its comprehensive options that cover all movement scenarios.

Are GRN and delivery notes the same?

Yes. A Goods Received Note and a Delivery Note are the same. It is a document that serves as official proof of customers receiving goods or services. Both suppliers and customers can use this document to verify that the goods have been delivered

Recommended Articles

This has been a guide to the Full Form of GRN & its definition. Here we discuss the process of Goods Received Note with its features, importance, & differences. You may refer to the following articles to learn more about finance –

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